China secondary bond market:

Offshore volumes continue falling

Offshore trading volumes continue falling

• Based on MIFID and TRACE data, China offshore names' total trading volume was only $6.7 billion in April. Issuers with investment grades like Alibaba and Tencent were most liquid.
• TAGG <GO> provides a display of aggregated post-trade volumes for fixed-income securities, to show market direction and liquidity.

Offshore trading volume of China issuers ($ millions)

Source: Bloomberg TAGG ; TRACE and MIFID data

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Chengtou had largest domestic spread widening
Domestic bonds saw lower volatility in April as China pledged to support its property sector at both the central and provincial levels after a plunge in home sales during the last few months. The domestic bond universe's average option-adjusted spread for fixed-rate medium-term notes tightened 18 basis points for all rating buckets and sectors, and 16 bps for the real-estate sector, compared to end-March. Chengtou issuer Yinchuan Tonglian (TLINVT) saw more than 740 bps of spread widening in its August 2023 medium-term note. We believe the movement may only reflect volatility due to illiquid trade rather than being a signal of credit risk, as chengtou bonds may continue to enjoy support from provincial governments.

Use FIW@CN to see the yield change based on local ratings and issuers of China's domestic bonds by sector.

China domestic bonds' spread change in April

Source: FIW@CN <GO>, Bloomberg Intelligence